Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. payback period and npv: taxes and straight-line de

Payback Period and NPV: Taxes and Straight-Line Depreciation Assume that United Technologies Corporation is evaluating...

80.2K

Verified Solution

Question

Accounting

image

Payback Period and NPV: Taxes and Straight-Line Depreciation Assume that United Technologies Corporation is evaluating a proposal to change the company's manual design system to a computer-aided design (CAD) system. The proposed system is expected to save 13,500 design hours per year an operating cost savings of $55 per hour. The annual cash expenditures of operating the CAD system are estimated to be $300,000. The CAD system requires an initial investment of $750,000. The estimated life of this system is five years with no salvage value. The tax rate is 35 percent, and United Technologies uses straight-line depreciation for tax purposes. United Technologies has a cost of capital of 14 percent. (a) Compute the annual after-tax cash flows related to the CAD project. (b) Compute each of the following for the project: 1. Payback period. Round your answer to 2 decimal places. years 2. Net present value. (Round answer to the nearest whole number.)

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

explain project cost-benefit analysis?

General Management
Q

Write 450 words analysis about David Schaefer and his role and career at 3M.

General Management
Q

ZA 6 2 Modeling Tax Schedules 7 Let y represent the tax and x represent...

Basic Math
Q

Use geometry not Riemann sums to evaluate the following definite integral Sketch a graph of...

Calculus
Q

y 1 x 1 2 1 13 4 Laesia is creating beaded jewelry to give...

Algebra
Q

In cell f4 create a formula using Hlookup function to determine the cost per participant...

Accounting
Q

1- Para desarrollar un nuevo juego de mesa, Hasbro rene a empleados de fabricacin, diseo,...

Accounting
Q

Stuart Corporation reported the following operating results for two consecutive years: Required ...

Accounting
Q

Check my work Problem 6-19 Variable Costing Income Statement; Reconciliation [LO6-2, LO6-3] During Heaton Company's...

Accounting
Q

Francis files his California Form 540 as head of household and has line 19, taxable...

Accounting
Q

Budgeting Inventories For each independent situation below, determine the missing amounts

Accounting
Q

at the end of October, Debra laminated the company's situation: in the middle of production...

Accounting